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TMI Blog2019 (11) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged investments. In these given facts we observe that Ld. CIT(A) has rightly deleted the impugned disallowance for interest under Rule 8(2)(ii) of the I.T Rules following the decision of Coordinate Bench, Ahmedabad in the case of ITO V/s Karnavati Petrochem Pvt. Ltd. [ 2014 (1) TMI 920 - ITAT AHMEDABAD] . Hon ble Punjab Haryana High Court in the case of CIT V/s Hero Cycles Ltd. [ 2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] after considering the facts that the assessee had earned net interest income during the year held that the disallowance u/s 14A of the Act is uncalled for/ Thus since the assessee had earned net interest income during the year and also possess sufficient interest free funds to cover up the alleged investments, Ld. CIT(A) has rightly deleted the proportionate interest disallowance made by the Ld. A.O applying Rule 8D(2)(ii) of the I.T. rules. Administrative expenses disallowed u/s 14A - Rule 8D(2)(iii) of the I.T. Rules has been specially enacted to compute the administrative disallowance since it is practically not possible to bifurcate the administrative expenses specifically incurred for managing the investment portfolios. But certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from sale of equity shares under the head Long Term and Short Term Capital Gain needs to be accepted. Disallowance of depreciation and insurance of motor cars in the name of Directors - HELD THAT:- As decided i Swagat Infrastructure Ltd [ 2014 (1) TMI 881 - ITAT AHMEDABAD] assessee has made submission that the cars were purchased in the name of the Director and such cars are utilized for the purposes of its business. Therefore the assessee is entitled for depreciation and the interest expenditure. We are of the considered opinion that the assessee would be entitled for the allowance depreciation as well as interest expenditure if the assessee is able to prove that the vehicles were under the dominion control of the assessee-company and were utilized for its business purpose. The contention of the assessee is that the vehicles were utilized for business purpose and the assessee-company has shown it in block of assets. We find that this contention of the assessee is not considered by the authorities below in the light of the ratio laid by Hon'ble Supreme Court rendered in the case of Mysore Minerals Ltd. [ 1999 (9) TMI 1 - SUPREME COURT] we allow this ground of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho shall verify the contentions of the assessee that the alleged gain of ₹ 1.11 crores forms part of the income shown in the Profit Loss Account. Assessee is directed to make necessary submission before the Ld. A.O with the ledger account of the capital gain account for sale of shares in order to satisfy the Ld. A.O. Ground of revenue allowed for statistical purposes. - ITA No 643/Ahd/2014 & 2717/Ahd/2014, 932/Ahd/2014, 2882/Ahd/2014, 786/Ahd/2016, 914/Ahd/2016, 63 & 1885/Ahd/2017 - - - Dated:- 29-11-2019 - Hon'ble Justice P.P.Bhatt, President And Hon'ble Manish Borad, Accountant Member Revenue by Shri T. Shankar, Sr. DR Assessee by Shri M.K. Patel, AR ORDER Manish Borad, The above captioned appeals filed at the instance of assessee pertaining to Assessment Years 2010-11, 2011-12 2012-13, 201314 2014-15 and the Cross appeals filed by the revenue pertaining to Assessment Years 2010-11,2011-12 2012-13 are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-VI CIT(Appeals)-10 (in short Ld.CIT(A) ], Ahmedabad dated 28.1.2014, 13.08,2014, 1.02.2016, 26.10.2016 30.06.2017 respectively which are arising out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 43B, the same is allowable. It is therefore prayed that the additions so made may kindly be deleted. 2.The Ld. CIT(A) has erred in law and in fact in confirming disallowance made u/s. 14A r.w.r. 8D(2)(iii) by AO to the extent of ₹ 35,19,740/(₹ 45,62,870/- Less: ₹ 10,43,130/- offered by appellant) out of total disallowance of ₹ 35,19,740/- on the alleged ground of expenses in the nature of administrative expenses for the earning of exempt income. Whereas, the appellant furnished that investment in subsidiary companies and partnership firms are in the nature of business arrangement/strategies and for the purpose of commercial expediency. It is therefore prayed that the additions so made may kindly be deleted. 3.The Ld. CIT(A) has erred in law and in fact in restricting depreciation on software @ 25% as against 60% claimed by the appellant. It is therefore prayed that AO may kindly be directed to allow depreciation @ 60% on computer software and disallowance so made may kindly be deleted. 4.The Ld. CIT(A) has erred in law and in fact in directing to treat the transaction in shares and securities as business transactions if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S as per section 194H on payment in the nature of Sub brokerage/Commission. 7.The CIT(A) has erred in law and, on facts by directing to treat profit from sale of shares held only up to 30 days as business income and the balance as Capital gains disregarding the findings in the assessment order which reveals that the profit was earned from systematic business activity with substantial turnover. 8.The CIT(A) has erred in law and on facts by deleting the addition of ₹ 45.91 lacs u/s 14A to Book profit despite the fact that the same is required to be added to Book profit as per Explanation 1, clause (f) to section 115JB(2) of the Act. 9.The CIT(A) has erred in law and on facts by deleting the addition of ₹ 1.11 crores to Book Profit despite the fact that the same represented omitted income which was not included in the P L Account and considered as Business income. On the fact and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above since the assessee has failed to disclose his true income/book profit. The appellant prays that the order of CIT(A) on the above grounds be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness activity with substantial turnover. 7.The CIT(A) has erred in law and on facts by deleting the addition of ₹ 45.59 lacs uls 14A to Book profit despite the fact that the same is required to be added to Book profit as per Explanation 1, clause (f) to section 115JB(2) of the Act. On the fact and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above since the assessee has failed to disclose his true income/book profit. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave, to amend or alter any ground or add a new ground which may be necessary. 4. Assessee has raised following grounds of appeal; ITA. No 786/Ahd/2016 Assessment Year 2012-13 1.The Ld. CIT(A) has erred in law and in fact in confirming disallowance made by the AO of ₹ 26,323/- being unpaid employees contribution to ESI as per Hon ble Gujarat High Court in the case of CIT vs. Gujarat State Transport Corporation in Tax Appeal No.637 of 2013. Whereas, the said issue is decided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in fact in confirming disallowance made by the AO on account of late payment to employees contribution to ESI u/s 36(1)(VA) OF ₹ 10,785/- as per Hon ble Gujarat High Court in the case of CIT vs. Gujarat State Transport Corporation in Tax Appeal No.637 of 2013. Whereas, the said issue is decided by Gujarat High Court and other High Courts that if the payment is made within the provisions of section 43B, the same is allowable. It is therefore prayed that the additions so made may kindly be deleted. 2.The Ld. CIT(A) has erred in law and in fact in restricting depreciation on software @ 25% as against 60% claimed by the appellant. It is therefore prayed that AO may kindly be directed to allow depreciation @ 60% on computer software and disallowance so made may kindly be deleted. Your appellant craves liberty to add, to alter, to modify, to amend or delete any of the grounds of appeal at the time of on or before the hearing of appeal. 5. Revenue has raised following grounds of appeal; ITA No.914/Ahd/2016 Assessment Year 2012-13 1. The CIT(A) has erred in law and on facts in deleting the addition of ₹ 14,52,432/- made by AO on account of depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convenience and brevity. The assessee and revenue are in cross appeal for Assessment Years 2010-11, 2011-12, 2012-13 and assessee is also in appeal for Assessment Years 2013-14 and 201415 raising respective grounds mentioned in the earlier paras. 7. Brief facts of the case are that the assessee is a company derives income from brokerage business of shares and securities with NSE of India, income from depository services (NSDL) and income from arbitrage in shares securities and F O. The appellant company has filed its return of income au/s 139(1) of the Act. Assessments completed u/s 143(3) of the Act by Ld. A.O after making various additions/disallowances to the total income declared by the appellant. Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded. 8. First common issue raised solely by the assessee relates to disallowance u/s 43B of the Act for delay in depositing the employees contribution to PF and ESI at ₹ 1,05,190/-, ₹ 1,32,396/-, ₹ 26,323/-, ₹ 18,497/- and ₹ 10,785/- respectively. Ld. CIT(A) confirmed the disallowance following the judgment of jurisdictional High Court in the case of CIT V/s Gujarat State Road ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act. Consequently, all these appeals are allowed and the impugned judgment and orders passed by the tribunal in deleting the disallowances made by the AO are hereby quashed and set aside and the disallowances of the respective sums with respect to the Provident Fund/ESI and made by the AO is hereby restored. The question raised in present appeal are answered in favour of the revenue. With this, all these appeals are allowed. 12. We, therefore, in the given facts and circumstances of the case and respectfully following the judgment of jurisdictional High Court in the case of CIT Vs. Gujarat State Road Transport Corporation (supra) confirm the finding of Ld. CIT(A). In the result the GroundNo.1 of the assessee s appeal commonly raised for Assessment Years 2010-11 to 2014-15 is dismissed. 13. Now we take up next common issue relating to disallowance made u/s 14A of the Act for Assessment Years 2010-11 to 2012-13 For all these three assessment years Ld. A.O applied the method provided in Rule 8D of Income Tax rules and computed the disallowance u/s 14A of the Act on two counts namely disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than the interest paid by the assessee for all the three assessment years. Further from perusal of the audited financial statements it emerges that the interest free funds available with the assessee in the form of share capital and accumulated reserve and surplus is much more than the alleged investments. In these given facts we observe that Ld. CIT(A) has rightly deleted the impugned disallowance for interest under Rule 8(2)(ii) of the I.T Rules following the decision of Coordinate Bench, Ahmedabad in the case of ITO V/s Karnavati Petrochem Pvt. Ltd observing as follows; 6.4. I have considered the facts of the matter. In the immediately preceding A.Y. 2009-10, the disallowance u/s.14A was upheld by my predecessor. However, during the course of the present appellate proceedings regarding the disallowance made under Rule-8D(2)(ii), the Id. A.R. relied on the Ahmedabad Tribunal decision dtd. 05.07.2013 in the case of ITO Vs. Karnavati Petrochem Pvt. Ltd. in ITA No.2228/Ahd/2012. In the said decision, it was held as under:- 7. We have heard the rival submissions and perused the material on record. We find that CIT(A) while granting relief to the Assessee has given a find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A and the impact of expenditure so incurred cannot be allowed to be set off against the business income which may nullify the mandate of Section 14A, cannot be accepted. Disallowance under Section 14A requires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance under Section 14A cannot stand. In the present case finding on this aspect, against the revenue, is not shown to be perverse. Consequently, disallowance is not permissible. We have taken this view earlier also in ITA No. 504 of 2008 (Commissioner of Income Tax Chandigarh II vs. M/s Winsome Textile Industries Limited, Chandigarh), decided on 25.8.2009, wherein it was observed as under:- 6. Contention raised on behalf of the revenue is that even if the assessee had made investment in shares out of its own funds, the assessee had taken loans on which interest was paid and all the money available with the assessee was in common kitty, as held by this Court in CIT v. Abhishek Industries Limited, (2006) 286 ITR 1 and therefore, disallowance under section 14A was justified. 7. We do not find any merit in this submission. Judgment of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee submitted that the alleged disallowance is on higher side since the amount of investment on which 0.5% administrative expenses has been disallowed also includes investments made in the partnership firm and the income from such partnership firms have also been subjected to tax. He also submitted that the investment in shares are towards quoted and unquoted shares. Unquoted shares are investment in subsidiary/group companies. Investment in equity shares also includes the old investments which has been brought forwarded and no administrative expenses is incurred on such investments. 22. Per contra Ld. Departmental Representative vehemently argued supporting the orders of lower authorities. 23. We have heard rival contentions and perused the records placed before us. Assessee s common grievance in Ground No.2 for Assessment Year 2010-11 2012-13 challenges the finding of Ld. CIT(A) confirming the addition for administrative expenses disallowed u/s 14A of the Act computed @0.5% of average investments. 24. We observe that for Assessment Year 2010-11 assessee has not offered any amount suo moto as disallowance for administrative expenses u/s 14A of the Act. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 16,08,014/- and ₹ 27,22,702/- respectively. 29. Brief facts of this ground is that during the assessment proceedings Ld. A.O allowed depreciation on computer software claimed @25% as against 60% claimed by the assessee. Aggrieved assessee preferred appeal before Ld. CIT(A) but could not succeed. Now the assessee is in appeal before the Tribunal. 30. Ld. Counsel for the assessee stated that the assessee has claimed depreciation on computer software @60% since software is an integral part of computer system and used in the broking business. Trading activity is done through software provided by stock exchange. He further stated that the issue stands squarely covered by the decision of the Co-ordinate Bench in favour of the assessee in the case of ACIT V/s Zydus Infrastructure Pvt. Ltd ITA No.1464/Ahd/2012 order dated 21.7.2016. 31. Per contra Ld. Departmental Representative vehemently argued supported the orders of both the lower authorities. 32. We have heard rival contentions and perused the records placed before us. Through common Ground No.3 in respective appeals for the Assessment Years 2010-11 to 2014-15 assessee has challenges the orders of lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance of ₹ 3,93,758/-, ₹ 5,23,586/-, ₹ 5,81,571/-, ₹ 16,08,014/- and ₹ 27,22,702/- for Assessment Years 2010-11 to 2014-15 respectively. In the result the ground No.3 raised by the assessee for Assessment Year 2010-11 to 2014-15 stands allowed. 35. Now we take up issue relating to gain/ loss from transactions of sale of shares and securities. This issue relates to Assessment Year 2010-11, 2011-12 and 2012-13. Assessee who is a share broking house is also engaged in share trading of equity shares and future options and derivatives also makes investment in equity shares with an object to hold for a long period. The gain/loss from sale of the equity shares held under the head investments has been shown by the assessee as Long Term Capital Gain/Short Term Capital Gain as per the period of holding. 36. Ld. A.O on observing the alleged transactions relates to huge quantity of shares transacted many times during the year and also looking to the facts that assessee is itself engaged in trading of shares consistently held that such gain should be taxed as business income and not as Long Term/Short Term Capital Gain claimed by the assessee. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, the funds are company's own funds, the investment are in the nature of long term investment, deliveries are taken for all such investments. Thus, the shares are investment of the company. In this regard, the appellant company relies on following cases, where the Hon'ble Courts and Tribunals decided that the gain from investment in shares is to be treated as capital gain and not as business income. (i) CIT vs Gopal Purohit (SC) SLP NO. CC 1680212010 dated 1511-2010. (ii) J M Share Stock Brokers Ltd v. Jt. CIT, Special Range-22, Mumbai in ITA No. 2801/Mum/2000 (iii) Himenshu J Shah Others v ACIT, CC 2(3), Ahmedabad in ITA No. 2875. 2878, 2879, 2800/Ahd /2008 (iv) Nagindas P. Sheth (HUF) Vs. ACIT ITA No. 961/!Mum/2010 (ITAT Mumbai Bench G ) (v) CIT vs Niraj Amidhar Surti 347 ITR 149 (GU) HC) (vi) ClT-11 vs. Vaibhav J Shah HUF - Tax Appeal no 77 78 of 2010 order dated 27-06-2012 (Guj HC) In View of the above facts. submissions. Explanations and decisions of Hon'ble Courts and Tribunals, it is prayed that the appellant company has made investment and the activity may kindly be treated as investment and not business. Surplus/Deficit on shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 dated29.2.2016, in order to deal with the taxability of surplus on sale of shares and securities; Sub: Issue of taxability of surplus on sale of shares and securities - Capital Gains or Business Income - Instructions in order to reduce litigation - reg.- Sub-section (14) of Section 2 of the Income-tax Act, 1961 ('Act') defines the term capital asset to include property of any kind held by an assessee, whether or not connected with his business or profession, but does not include any stock-in-trade or personal assets subject to certain exceptions. As regards shares and other securities, the same can be held either as capital assets or stock-in-trade/ trading assets or both. Determination of the character of a particular investment in shares or other securities, whether the same is in the nature of a capital asset or stock-in-trade, is essentially a fact-specific determination and has led to a lot ot uncertainty and litigation in the past. 2. Over the years, the courts have laid down different parameters to distinguish the shares held as investments from the shares held as stock-intrade. The Central Board of Direct Taxes ('CBDT) has also, through Instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciples have been formulated with t he sale objective of reducing litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the Act shall continue to apply on the transactions involving transfer of shares and securities . 42. The above circular has been prepared keeping in mind various judgments relating to this issue both favouring the assessee as well as revenue. Further we observe that Ld. CIT(A) allowed the assessee s claim except for treating the Gain/Loss from its equity shares/securities held for 30 days or loss as business income. This finding was also reversed in Assessment Year 2012-13 when Ld. CIT(A) accepted the entire claim of Long Term Capital Gain and Short Term Capital Gain offered by the assessee in view of the fact that no such provisions in the Act is available for computing the gain for shares held for 30 days or less as business income. Ld. CIT(A) allowed the assessee s claim for Assessment Year2012-13 observed as follows; 10.3. The contentions of the learned A.R are that the appellant company is a broker of shares and securities on behalf of clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and not for the purpose of trade. The revenue brought any material to show that assessee has invested is share for trade . We further find that revenue has not tiled any appeal against the order of ld. CIT(A) treating the investment of assessee In shares for more than 30 days and less than 12 months as investment of assessee In shares for more than 30 days and less that 12 months as investment In short-term assets. There is no provision under the Act to indicate that the holding period of 30 days is relevant to decide whether any transaction made for investment or for trade. Therefore, we have no hesitation In holding that Ld. CIT(A) was not justified in treating the surplus arising out of sale of shares held for the period of less than 30 days as business income instead of short term capital gain shown by assessee . 10.9 Under the above fact, circumstances and jurisdictional tribunal decision In case of Shri Kalpesh C Shah (Supra), it is held that there is no provision under the Act to indicate that the holding period of shares less than 30 days is relevant to decide transaction made' in nature of trade and not as investment activity. Therefore, I am inclined to accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trading and frequent transactions have taken place it should be treated as business income . Certainly this could not be a bench mark to bifurcate the transaction being held for long term purposes as investor or as a trader. 46. In the case of assessee this claim has been consistently made for so many years. Transactions have been separately accounted for in the books. Equity shares purchased for Long Term purposes are held as Investment valued at cost price and equity shares held as stock in trade are shown under the head Inventories valued at cost or market price whichever is less . Gain/Loss as it is incurred has been disclosed in the financial statements and computation of income. Since no adverse material is brought on record by the revenue authorities in any of the years under dispute, we are of the considered view that the claim of the assessee of showing the gain from sale of equity shares under the head Long Term and Short Term Capital Gain needs to be accepted. We accordingly order so and allow the respective Ground No.4 of the assessee s appeal for Assessment Years 2010-11and 2011-12 and dismiss Ground No.7 5 of Revenue for Assessment Years 2010-11 , 2011-12 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Legislature to the assessee. It was further held by the Hon 'ble Supreme Court that the term owned as occurring in section 32(1) of the Income-tax Act must be assigned a wider meaning. The Hon'ble Supreme Court has held as under: It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting section 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent. Further, the Ahmedabad LT.A.T in the case of Ambuja Synthetics Mills Pvt.Ltd. Vs. The Dy. C.LT., Range-l , Ahmedabad, on similar facts, decided the issue in favour of the assessee, by holding It is not disputed that funds for purchases of the car were provided by the assessee company which is also reflected in the accounts of the assessee company. In our opinion, when the car is actually used for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered opinion that the assessee would be entitled for the allowance depreciation as well as interest expenditure if the assessee is able to prove that the vehicles were under the dominion control of the assessee-company and were utilized for its business purpose. The contention of the assessee is that the vehicles were utilized for business purpose and the assessee-company has shown it in block of assets. We find that this contention of the assessee is not considered by the authorities below in the light of the ratio laid by Hon'ble Supreme Court rendered in the case of Mysore Minerals Ltd. (supra). Respectfully following the ratio laid by the Hon'ble Supreme Court in the case of Mysore Minerals Ltd. (supra) we allow this ground of assessee's appeal and direct the Assessing Officer to delete the addition. This ground of assessee's appeal is allowed. 53. We therefore in the given facts and circumstances of the case and respectfully following the judgments referred find no inconsistency in the finding of Ld. CIT(A) allowing the claim of depreciation and insurance expenses on motor cars held in the name of Directors. Accordingly Ground No.1 raised by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Delhi High Court in the case of Bonanza portfolio Ltd. 320 ITR 178 and also relying upon the decision of the Tribunal, Ahmedabad Bench in the case Rameshchandra D. Chokshi in ITA No. 1015/Ahd/08, the Id. CIT(A) deleted the additions. 10. Aggrieved by this the revenue is before us. The D.R. could not bring any distinguishing decision in favour of the Revenue. We find that an identical issue was considered by the Tribunal in assessee's own case in A.Y. 2008-09. In ITA Nos. 2754 2884/Ahd/2011, the relevant findings of the Tribunal are given on Para 4 of its order. 11. Respectfully, following the decision of the co-ordinate Bench, we confirmed the findings of the Id. CIT(A). This ground is also dismissed . 59. We therefore in the given facts and circumstances of the case and respectfully following the decision of the Co-ordinate Bench and also observing that facts are similar to those for Assessment Years 2010-11,2011-12 and 2012-13, find no reason to interfere in the finding of Ld. CIT(A) deleting the disallowance of bad debts (treating loss) at Rs. ₹ 42.20 lacs, ₹ 1.58 lacs and ₹ 1,19,85,613/-. Ground No.3 of the revenue s appeal for Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 04.09.2015 in ITA No. 2754 2884/Ahd/2011. The findings of the Tribunal can be found at Para 3 of its order. Wherein it has followed the decision of the Hon'ble jurisdictional High Court in the case of Prayas Engineering Ltd. in Tax Appeal No. 1237 of 2014 dated 17.11.2014 and also relied upon the decision of the Hon'ble High Court of Calcutta in the case of S.K. Tekriwal 361 ITR 432. 7.Respectfully, following the decision of the co-ordinate Bench, we set aside the findings of the Id. CIT(A) and direct the AO to delete the impugned disallowance. First ground of revenue's appeal is dismissed and that of assessee's appeal is allowed. 64. In the given facts and circumstances of the case and respectfully following the decision of the Co-ordinate bench we confirm the findings of Ld. CIT(A). In the result the grounds No. 5 4 raised by the revenue for Assessment Years 2010-11, 2011-12 and 2012-13 is dismissed. 65. Now we take up common issue raised in revenue s appeal challenging the deletion of disallowance u/s 40(a)(ia) of the Act on sub-brokerage/commission at ₹ 52.16 lacs, ₹ 82.11 lacs for Assessment Years 2010-11 2011-12 respectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actual allotment of shares and takes place after the allocation of shares. As seen from the chart submitted by the A.R., it is seen that brokerage was received by the appellant from three weeks to 9 months after the IPO allotment date and the brokerage received was ranging between 0.075 and 0.60. Therefore, I am not in agreement with the finding of the A.O. that the payment of sub-brokerage was not in connection with the securities. I am of the view that appellant was not liable to deduct tax on the impugned sum and therefore the provisions of Section 40(a)(ia) are not attracted. Impugned disallowance is deleted. This ground of appeal is allowed . 70. We also find that similar issue came up before the Co-ordinate Bench, Delhi in the case of ITO V/s Mittal Investment Co Appeal No.1951 (Delhi) of 2012 order dated 7.12.2012 (2013) 33 taxmann.com 52 (Delhi-Trib.) wherein the Tribunal observed as under:- 12. Ld. Counsel reiterated the submissions made before ld. CIT(A) and submitted that in view of the provisions of Explanation (i) to section 194H read with section 2(h) of the Securities Contracts (Regulation) Act, 1956, no TDS was required to be made on services related to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whatever name called), issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or receivable, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receivable, including mortgage debt, as the case may be; (ii) Government securities; (iia) such other instruments as may be declared by the Central Government to be securities; and (iii) rights or interest in securities; 16. Thus, it is evident that mutual funds are outside the ambit of the term 'securities'. In the present case, admittedly the assessee was agent of post office schemes, PPF, RBI Bonds, LIC, Mutual Funds etc. and, therefore, the commission paid by it to other persons whose services were taken for earning commission was also outside the purview of provisions of section 194H. The definition uses the term in relation to which clearly implies that whenever any commission or brokerage is paid in relation to securities then it would be outside the ambit of section 194H. Admittedly, the assessee had paid sub-brokerage in relation to securities (mutual fund) and, therefore, it was outside the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Ahmedabad Bench in the case of DCIT V/s Torrent Cable Limited (supra) which has followed judgment of Special Bench in the case of ACIT V/s Vineet Investment (P) Ltd as well as Arvind Ltd V/s DCIT, ITA No.1816/Ahd/2011 observing as follows; 3. When the matter was called for hearing, the learned AR for the assessee pointed out in the Revenue s appeal that ground no.1 relates to adjustment on account of disallowances made u/s 14A (under the normal provisions of the Act) for the purpose of special provisions of Section 115JB of the Act concerning taxability on the basis of book profits. The learned AR pointed out that the issue is no longer res integra and is covered in favour of the assessee by the decision of the Special Bench in the case of ACIT Anr. Vs. Vineet Investment Pvt. Ltd Anr. 165 ITD 27 (Delhi)(SB). 3.1 We find that the issue is squarely covered in favour of the assessee. Our view is supported by the decision of the co-ordinate bench of Tribunal in case of Arvind Ltd. vs. DCIT in ITA No.1816/Ahd/2011 where the decisions of the hon'ble Gujarat High Court and Delhi High Court were also referred for deciding the issue in favour of the assessee. The rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Year 2010-11 2011-12 stands dismissed. 78. Now we take up Ground No.9 of revenue s appeal challenging the on deletion of the addition to book profit at ₹ 1.11 Crores for Assessment Year 2010-11. 79. Brief facts relating to this issue are that the assessee while preparing the computation of income did not include Short Term Capital Gain and Long Term Capital Gain from sale of shares of Adani Enterprises, however the same were duly incorporated in the income shown in the Profit Loss Account. Ld. A.O was of the view that the alleged amount of capital gain needs to be added to the book profit whereas the assessee s contention was that the amounts already stands included in the book profit. When the matter came up before Ld. CIT(A), directions were given to the Ld.A.O to verify the claim of the assessee. Now the revenue is in appeal before the Tribunal. 80. We have heard rival contentions and perused the records placed before us. The issue relates to the deletion of addition of ₹ 1.11 crores to the book profit of the Short Term and Long Term Capital Gains earned from sale of shares of Adani Enterprises. Assessee has claimed that the impugned amount of capita ..... 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